Theranos whistleblower warns AI boom is an opportunity to deceive people
Tyler Shultz, who helped expose Theranos' faulty blood-testing devices, says due diligence is especially hard in AI startups. He argues investors should stop funding founders after a brief meeting.
Tyler Shultz, a former employee of the US blood-testing company Theranos and one of its key whistleblowers, has warned that the fast-growing artificial intelligence (AI) industry offers fertile ground for fraud. He made the comments in an interview with The San Francisco Standard, as a new documentary about Theranos founder Elizabeth Holmes revives public attention. The warning matters because AI companies that have never turned a profit are raising capital at trillion-dollar valuations.
The Holmes documentary
The documentary "You Can See Everything" captures Holmes' final weeks before she began her prison sentence. It is directed by Nathan Fielder and Lance Oppenheim and, according to TechCrunch, has become one of the highest-grossing documentaries of all time. The film deliberately avoids portraying Holmes as either a master manipulator or a victim, and instead shows her knack for drawing pity even from people who know about her crimes. Shultz did not need to see it to form his view of her.
Theranos reached a peak valuation of around $10 billion although its technology did not work. Its devices reached Walgreens stores and gave faulty results to real patients. The company used its own machines for only a fraction of tests and outsourced the rest to third-party equipment. Holmes is serving a prison sentence of more than eleven years.
A warning to investors
Shultz says that a thirty-minute coffee meeting followed by a $100,000 cheque should be a thing of the past. In his view, Holmes took that model and scaled it up to $100 million. Theranos funding often came from individuals such as the DeVos and Walton families rather than venture firms, and the company withheld scientific evidence from investors, citing trade secrets.
He believes due diligence is especially difficult in AI, because it is hard to tell something truly new from a ChatGPT wrapper. For anyone wanting to deceive people, he said, this is a great opportunity.
The film also shows Holmes and her partner Billy Evans working on Haemanthus, a diagnostics company reportedly backed by about $20 million. Shultz says he feels uneasy about what may come next.
